What do you need to know about refinancing a home loan?
How happy are you with your home loan? If the answer is ‘not very,’ it’s important to know that you have the power to change the situation. This is known as refinancing, and the process provides you with an opportunity to get a better deal, secure a loan that more closely suits your needs and, perhaps most importantly, save money.
While these benefits are incredibly attractive, the idea of securing a new home loan through a different lender can seem daunting. However, the process can be very simple, if you know when and how to refinance.
When to refinance a home loan.
The biggest sign that it’s time to refinance your home loan is being dissatisfied with your current mortgage. While these types of loans are a big commitment, they shouldn’t be something that causes you undue stress. If your current lender’s customer service isn’t up to scratch or you’re paying interest rates that aren’t competitive with the rest of the market, then there are some real benefits to be had from switching.
Interest rates are perhaps the most common reason for refinancing, and it’s not hard to see why. Even a slightly more competitive interest rate will see you paying less each month, with the potential savings over the loan’s lifetime totalling tens of thousands of dollars1. For this reason, to get the most out of refinancing, it’s important to act quickly. There’s no sense in delaying for months or even years while continuing to pay a high amount of interest on your repayments, and the sooner you switch, the more you’ll save.
When refinancing, it’s also important to look at the other financial aspects of a mortgage. For example, your current home loan may not allow for any flexibility with extra payments. If that’s the case, you could be missing out on the chance to pay off your mortgage over a shorter period. At the same time, if you want to make extra repayments but aren’t completely confident in your cash flow, it’s essential to have the ability to withdraw any additional deposits that you’ve made towards your overall debt.
How to refinance a home loan.
Once you decide to refinance, the next step is understanding how the process works. In years gone by, the process for refinancing was relatively complex, but here at Beyond Bank, we believe in a simpler way.
The easiest option is to simply fill out our online form to get started. The process takes about 15 minutes and will provide you with access to a dedicated lending consultant who will keep you updated throughout the approval process. Alternatively, if you’d prefer to work through the process in person, you can make an appointment with a lending consultant, who will guide you through the application.
Once all of the paperwork has been completed for refinancing a home loan, and if you meet the relevant criteria, then you’re almost done! All that’s left is to take care of any discharge fees that your previous lender may charge you for leaving and wait for your new loan to take effect. This can take roughly four weeks, and at the end of that time, you’ll be able to enjoy a better, more affordable mortgage.
1Differences in repayments and savings over the life of the loan are calculated by comparing our 3.79%p.a. rate against an interest rate of 4.88%p.a which is the average standard variable home loan interest rate according to rate comparison site Mozo (current as of July 2018). The comparison rate/s are calculated for a variable loan of $375,000 with monthly repayments over a term of 25 years. WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates.